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An study of liquidity shock, financial market participation on hollowing behavior of controlling shareholder

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  • Lu, Xiaoyu
  • Gui, Zhou

Abstract

Agency conflict between controlling shareholders and small and medium-sized shareholders has become a key issue of concern and research in academia. However, existing studies have less thought about external root causes leading to their hollowing out behavior, especially the lack of in-depth research on the role of liquidity shocks in the mechanism between hollowing out behavior and market participation. Based on market participation perspective, empirical evidence from listed companies from 2006 to 2022, this paper empirically finds liquidity shocks significantly inhibit efficiency of controlling shareholders' hollowing out behavior; at the same time, financial market participation strengthens this inhibitory effect.

Suggested Citation

  • Lu, Xiaoyu & Gui, Zhou, 2024. "An study of liquidity shock, financial market participation on hollowing behavior of controlling shareholder," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323013314
    DOI: 10.1016/j.frl.2023.104959
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    References listed on IDEAS

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    1. Yu, Chenyang & Sun, Hanbing & Fu, Changluan, 2022. "Is innovative activity a way to conduct tunneling behavior? Evidence from the seasoned equity offerings of Chinese firms," Finance Research Letters, Elsevier, vol. 46(PB).
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    4. Benzennou, Bouchra & ap Gwilym, Owain & Williams, Gwion, 2020. "Commonality in liquidity across options and stock futures markets," Finance Research Letters, Elsevier, vol. 32(C).
    5. Vidal-Tomás, David & Tedeschi, Gabriele & Ripollés, Jordi, 2020. "The desertion of rich countries and the mutual support of the poor ones: Preferential lending agreements among the PIGS," Finance Research Letters, Elsevier, vol. 34(C).
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